8. Government by Laws or Obfuscation? Executive Order 12866, Is Quietly Amended by Biden’s Circular A-4
The Biden administration has phased out one of the most important concepts in economics from federal regulatory analysis: opportunity cost.
On April 6, 2023, a 91-page Circular was issued by the White House Office of Management and Budget (OMB) to quietly phase out all consideration of opportunity cost when determining how to allocate our money. This Circular, Circular A-4, serves as a clear example of how we are no longer governed by laws, but rather by obfuscation.
Opportunity Cost refers to what would have happened with the resources required for regulation if they had not been used for a specific regulation. For example, in 1986, smoke detectors were credited with saving three lives, but at a combined cost of over $2 billion. Considering the opportunity cost raises the question: in this instance, could the money have saved more lives if spent on necessities like food for the starving, cancer research, or at the time, fighting AIDS?
If we aim to have even an imperfect confidence that regulations improve the world, we must consider other alternatives for spending, as well as the option of not spending the money on a specific regulation. Additionally, we must calculate the expected returns from not spending compared to the hypothetical return from the regulation.
Considering opportunity costs before imposing a new regulation means pondering what a million dollars would have been spent on, such as research and development, if it were not spent on the regulation.
The Biden administration, by eliminating any consideration of other opportunities and assigning values, will only assume that the "assumed benefits" of the proposed regulation justify the cost. This will lead government agencies, in an Orwellian manner, to underestimate or omit the costs of their future rules and regulations, clearly adding an undisclosed cost to our social wealth in every future rule and regulation passed and implemented by OMB.
"The real burden on the public is what the government spends (and mandates others to spend)." - Milton Friedman.
The Omnibus spending bill borrowed money for fiscal 2023, amounting to $1.7 trillion. However, the actual debt spent in fiscal '23 appears to have exceeded $1.7 trillion, estimated (by WSJ) at 7% of GDP or $1.865 trillion, $165 billion more than expected. Since there is no debt ceiling until 2025, it doesn't seem to matter, really.
A final fact of great concern is that the cost to operate all our governments (federal, state, and local) was about 27.87% of our gross domestic product (GDP) in 1968. In 2018, the costs for all governments had risen to 38.55% of GDP, reflecting a 35% increase over 50 years. In 2020, just three short years under Trump, it jumped another 16% to 44.82%, and in 2021, it was 43.02%. This level is unsustainable, as government is based solely on coercive law and funded entirely by borrowed money and taxes.
Is OMB obfuscation giving us the illusion that we are governed by laws?
Have a blessed week, Tony Christ